Integrated Local Strategy for Enhancing Olive Oil Prices: The Case of the Estepa Protected Designation of Origin (PDO) Local Agri-Food System (Spain)

Abstract

Spain’s olive oil production is world-leading. A significant portion of Spain’s olive oil production is in Andalusia, a southern region. In the Estepa region, a local agri-food system based on olive monoculture is emerging. Furthermore, producers are implementing strategies for differential quality and environmental sustainability to increase the competitiveness of their products. One of the main challenges facing the agricultural sector is generational change. The primary objective of this study is to analyze the results of the actions implemented to enhance the organization, sustainability, quality of production, and prices. The aim is to contrast, through a case study, the qualitative aspects that have enabled them to improve their product price through a competitiveness strategy based on quality improvement, which required synergistic actions in terms of productive structuring and sustainability. To this end, this study conducted structured interviews with key stakeholders in the PDO and consulted the National Reference Price Index at Origin. The results show that the pricing system based on olive oil quality has resulted in producers obtaining a differential income of €200/t in the market. However, it has been unable to halt the structural rural exodus and the progressive abandonment of productive agricultural activities. The study offers recommendations for rural development policymakers. Research into new models of production and organization for rural areas that offer social and environmental sustainability is vital, as these models have great relevance for political decision-making.

1. Introduction

Olive groves are the world’s second-largest area of permanent woody crops. Spain is among the leading olive oil producers and has the largest cultivated land [1]. There is a wide variety of cultivation systems depending on the number of olive trees per hectare, whether the crop is dryland or irrigated, and the level of the land slope [2]. Dryland olive groves are particularly prominent, accounting for 77.6% of Spain’s total olive grove area [3]. Irrigation systems, soil slopes, and other agronomic techniques influence the yields or productivity of olive groves.

In the region of Andalusia, located in southern Spain, olive cultivation is the most representative and symbolic agricultural system [4]. This region’s production accounts for around 40% of the world’s olive oil production [5]. The great diversity of the landscapes makes it necessary to refer to them as the olive groves of Andalusia, in the plural, rather than the Andalusian olive grove [6]. Small family farms are prominent (59.2% have less than 5 hectares, and account for 14% of the cultivated olive grove area). Conversely, there are large estates, with more than 100 hectares; they represent 2.6% of the total number of farms, but they represent 25% of the total olive grove area in Andalusia [7].

In Spain, olive oil producers are facing profitability challenges. There are years when harvest costs exceed farmers’ selling prices [8]. This seriously impacts the development of areas where olive groves are deeply rooted and monocultured. Areas dependent on olive groves, with economic losses, are particularly vulnerable to price crises in the productive sector.

Olive oil companies have increasingly implemented strategies to differentiate their products. They have emphasized quality and added services to address profitability issues. One of the alternatives producers are developing to generate income and contribute to rural development is the differentiation of food products, combined with the unique quality of the product due to its origin. The territory is considered a “resource” for local production processes in these cases. The territory is an active subject of rural development, not a mere “support” for economic activities. This is a commitment to multiple functions and economic diversity in rural areas [9]. This model attempts to differentiate itself from intensive, mechanized, industrialized, and globalized production.

In this context, Local Agri-Food Systems (LAFS) are important as processes for activating territorial resources by local actors. These systems emerge with a concentration of businesses (farms, agri-food industries, marketing companies, service industries) and regional development institutions or agencies structured in a network. All of these are in proximity within the same territory. They specialize in a unique agri-food product, driving territorial development [10,11]. The factors of territorial anchoring are physically derived from human activity and determine the uniqueness and differential quality of food. Furthermore, coordination between family micro-enterprises and local policies is important for promoting and protecting small, differentiated food production systems tied to the territory [12].

The LAFS implements strategies that add value to distinctive products. This allows them to generate differentiation rents and contribute to rural development. They use distinctive signs that reflect the products’ unique characteristics. The most important distinctive signs are associated with the territory and/or the production process (organic, integrated farming). These labels typically appear on the product packaging, along with the brand name managed by the marketing company [13]. This label is a tool to inform consumers of the product’s distinctive quality characteristics. It aims to overcome the asymmetric information that sometimes exists in the current globalized agri-food system [14].

Mediterranean countries have a long tradition of standardizing and recognizing the differential quality of certain agricultural and food products associated with their geographical origin. In the European Union (EU), two Community regulations stand out: 2081/1992 [15] and 510/2006 [16]. These define two legal entities: Protected Designation of Origin (PDO) and Protected Geographical Indication (PGI).

Spain’s diverse climate, soil, olive varieties, and agronomic practices determine the range of olive oil varieties. Spain has 28 olive oil PDOs and 2 PGIs [17]. This paper analyzes the Estepa PDO in Andalusia. The production area is in the southwest of the province of Seville, bordering the province of Córdoba to the north and the province of Málaga to the south. It comprises 12 municipalities in the province of Seville and one in the province of Córdoba. Presently, producers are implementing strategies for differential quality and environmental sustainability to increase the competitiveness of their products. Previous studies in this area have included: (1) the rents of differentiation with quality strategies in LAFS for olive oil [18]; (2) the territorial externalities of typical foods [19]; (3) the governance structure of PDOs [20]; (4) erosion and its impacts on olive grove sustainability [21,22]; and (5) the construction of quality in local olive oil systems [23]. One of the main challenges facing the agricultural sector is generational change. Indeed, since its inception and successive reforms, the Common Agricultural Policy (CAP) has considered, in its priority objectives, the need to maintain and rejuvenate the agricultural population. Nonetheless, there are few empirical studies on this important objective of social sustainability.

The proposed research below seeks to answer a series of research questions, which will subsequently allow us to formulate objectives and hypotheses to be tested:

How is the Local Food System of Estepa characterized by the monoculture for the production of Extra Virgin Olive Oil (EVOO)? What are the reasons why EVOO from this region is considered to be of such high quality? What strategies have been implemented? Have the strategies for structuring, sustainability, and quality allowed for higher selling prices in the markets? Are these strategies interrelated? Do the improved prices and resulting price differentiation solve the problems of generational change in the agricultural sector of this region? Do they enable small landowners to continue working in agriculture in the region?

The work presented in this article has the following objectives: (a) to analyze the price improvement policy through quality and environmental sustainability of the Estepa PDO Local Agri-food System; (b) to verify whether the results obtained from price increases allow for the renewal of generations of farmers and their continued employment.

The research hypotheses that will be addressed and tested are as follows:

H1. 

The development of strategies for organization, sustainability, and quality has enabled the production of EVOO, which commands a higher selling price in the markets.

H2. 

Improving product quality required a comprehensive, progressive strategy initiated decades ago that combines strengthening first- and second-tier cooperatives, promoting sustainable production methods, and controlling and branding differentiation.

H3. 

Despite improved prices, the trend of aging populations and small landowners abandoning the activity has not been reversed.

2. Materials and Methods

2.1. Contextual Approach

Agricultural systems in territories are shaped by multiple geophysical factors, as well as economic, social, technological, institutional, and political factors. Forms of agricultural production, distribution, marketing, and consumption have evolved and influenced the development of territories. Agricultural production has been integrated and adapted to the demands of capital valorization. Production has introduced modifications that have had substantial socioeconomic and environmental effects [24]. The Academy has been exploring, from various approaches and areas of science, these shifts at a global level [25,26,27] and at a local or sectoral level [28,29,30]. This way, the different approaches have found answers to how these agricultural methods have evolved, what the factors of change have been, and what results or impacts they have had.

Subjecting agricultural activity to the valorization of capital and to satisfying the food needs of a more urbanized population requires overcoming traditional agricultural methods of subsistence economies or purely export-oriented colonial methods. This was the case of olive oil production [31]. Agrarian transformations began to reach Spain at the end of the 1950s. The transformations in southern Spain had some peculiarities in the monoculture of olive groves to produce oil. The first signs of economic opening and recovery occurred [32,33]. Expectations of change arose with the extension of olive oil as an industrial food product associated with the Fordist production and consumption regime that was beginning to prevail [32,34]. Then, a weak oil industry focused on producing quantity over quality began to recover and transform. An attempt was made to change the role of oils only to an internal demand for food and industry (olive oil) (Pomace, soaps, glycerin, margarines…) [32]. However, in the second food regime, where the agri-food industry was increasing its role, the olive oil sector continued to exemplify limitations and difficulties: Inflation spirals that increased wage costs in agriculture; strong competition from other oils (sunflower, soybean, pomace and seed mixtures…) and animal fats that grew driven by the green revolution, which developed and extended the agricultural-livestock complex throughout the Iberian Peninsula; the opening to the import of other fats for the industry; the existence of a deficient electrical network and very old mills; wages in the countryside became more expensive; demand was undemanding; and foreign markets had been lost that were difficult to recover. Collectively, this emphasized the weaknesses of the olive mills in southern Spain. This requires the implementation of restructuring strategies. Thus, in the 1950s and 1960s, the processes of the structuring and associating primary producers (of olives) into cooperatives occurred. They emerged to implement strategies of vertical agricultural-industrial integration. This was the first step for small and medium-sized olive grove owners to obtain greater added value from producing olive oil in their oil mills. However, rising wage costs in the primary sector and the difficulties in adapting it to the new demands of modern agriculture meant that their competitive opportunities were still very limited in the 1970s [35]. High production costs and low sales led to uprooting olive trees [36] or shifting part of their crops to table olives [32].

It can therefore be stated that, while it is true that the Fordist food system mechanized the Spanish olive grove, with a greater consumption of fossil fuels, made it less labor-intensive, integrated it vertically, and structured it socially through cooperatives [37], it was never able to recover from its prolonged crisis, which had begun in the 1930s. Thus, the crisis continued until Spain joined the European Economic Community (EEC) [38]. While the olive oil industry recovered its export capacity in the 1960s, Italy was the destination for most of the Spanish production, which was exported in bulk. This prevented this production’s most profitable added value from being obtained at source.

A turning point was reached in the 1980s, when, having overcome the crises of the 1970s, a new food regime appeared to begin [39], in which its global organization intensified: markets expanded not only in which to sell products but also in which to purchase inputs at lower costs. Large multinational companies continued increasing their power over who, how, and for whom production occurs worldwide. Transformations in commercial distribution and more segmented consumption patterns then emerged. New competitive demands arose through cost reduction, innovation, improvement, and quality certification [23,40,41]. This initiated highly significant changes in the modes of productive organization and shifts in the roles of institutions and public policies. It produced changes in the form of markets, in their levels of protection, liberalization, and expansion. The expansion of the EEC, the single currency for Europe, the CAP and its successive reforms, financialization, and offshoring all respond to the demands of intensified globalization. They respond to an attempt to recover the path of capital accumulation by diversifying supply (this implies breaking with the mass consumption model of homogeneous products of the Fordist food system). This made it possible to definitively halt the sharp rise in costs that had been present since the 1970s crisis.

The olive oil industry is embracing these significant changes. Numerous restructuring processes are moving toward greater concentration of refining industries to increase competitive efficiencies [37]. Significant investments from transnational corporations have arrived. These investments have been in strategic locations along production chains [38]. Yields in the primary sector appear to be recovering. Though it should be noted that this is because they are subject to regulation, control, and support through the CAP. The CAP finances aid for production, consumption, and the use of olive oil in the canning industry, improving quality, and structuring producers. Initially, CAP’s objective of achieving food sovereignty significantly boosted production with direct financial aid and implemented minimum withdrawal prices guaranteed by the Community authorities. However, these measures extended the monoculture of olive groves in Andalusia, subject to a model that seeks to lower prices for production at source by significantly increasing supply. They also boosted investment in modernizing the olive oil industry and achieved greater vertical integration with the primary sector.

The first CAP reform was intended to resolve the serious surplus problems. However, this problem did not affect olive oil [42]. The truth is that all CAP reforms, which separated production from agricultural subsidies, had to adjust to the growth in the number of member countries; to the demands of the international free market per the principles of the World Trade Organization [42]. This is linked to an essential change in conception in the CAP since “food security”, without being antagonistic, would be more of a priority than “food sovereignty” [43,44]. The latest reforms of the CAP have helped to diversify, improve quality, and protect the environment. These conditions have been added in successive reforms of the CAP, which helped to introduce a new institutional and productive framework that would lead us to a third food regime, which currently prevails and has evolved from the 90s until now. A priori, it was especially important to seek greater balance in the value chain. This explained prioritizing institutional support for trade. Food safety, production quality, traceability, and certification demands have grown. Transformations toward competitive strategies based on quality respond to a historical process. A process, such as establishing Fordist agriculture in the past. Nonetheless, this process presents limitations and conflicts [45]. This process responds to paradigm shifts in Keynesian development models and progressively changes the idea of development poles with Fordist production and consumption organizations. These changes seek to implement models that harness endogenous potential [46]. This requires a greater role for local agents to advance local structuring and organization. This would allow their productions to be revalued in the productive bases of value chains [47]. The importance of sustainability is increasing. They seek formulas to make productivity improvements compatible with environmental care. This is done with technological innovation in rural areas to maintain biodiversity and animal welfare, or reuse waste for resources from other productive activities (energy and cosmetics). This responds to circular economy models. In olive groves and olive oil production, these endogenous development practices, driven by local agents, as in the case of the research object, the Estepa PDO, coexist with other paradigms. These are exogenous in nature and transform the landscape and production methods. These models coexist with different patterns of “super-intensification,” also known as “hyper-intensification.” These are highly mechanized models [48], seeking high economic returns at low prices. They do not achieve social or environmental improvements. Investment funds implement these models, often foreign. “…up to 2500 olive trees/ha are introduced, which soon form continuous hedges separated by tiny alleys; the ideal formation for harvesting with machines similar to those used in grape harvesting.” Plants are genetically improved through hybridization and produce less vigorous varieties…” “In addition to excellent economic results, the intensifying fever has had disastrous environmental effects. The loss of fertile soil, overexploitation and contamination of water resources, and the loss of biodiversity are very pronounced” [36] (p. 207).

Therefore, two models coexist in the territory and compete in the markets. Thus, endogenous initiatives, which seek to produce with respect for the environment and are distinguished by their superior quality, acquire greater significance. However, the significant support efforts by institutions for these quality-based competitiveness strategies that increase the price at origin [41,49] do not achieve all their objectives. The important aim of social sustainability is not achieved: The population does not stay in rural areas; the agricultural population is older [50]. This is even more evident in highly specialized agricultural regions, such as olive groves (monoculture predominates) [51]. Since its inception and successive reforms, the CAP has considered, in its priority objectives, the need to maintain and rejuvenate the agricultural population. In fact, in Spain, the CAP strategic plans 2021–2027, in its goal 7, continues to emphasize the need to rejuvenate and boost rural areas through business opportunities [50]. This again demonstrates the failure of institutional support efforts to curb aging and depopulation in rural and agricultural areas. These limitations have been analyzed by academia in numerous studies and from countless perspectives [52]. With diverse case studies and results, they have also been studied from a theoretical perspective [53]. However, there are few empirical studies on this subject, except for a few that analyze positive impacts [54].

2.2. Case Study, Methodology, and Sources

The Estepa olive oil PDO is in southern Spain, in Andalusia, in the Guadalquivir Valley, and covers approximately 60,000 ha of olive groves. These are in the rural areas of 14 municipalities (Aguadulce, Badolatosa and Corcoya, Casariche, El Rubio, Estepa, Gilena, Herrera, La Roda de Andalucía, Lora de Estepa, Marinaleda, Pedrera, Villanueva de San Juan, and Puente Genil). This rural area is highly geomorphologically diverse. It features inland plains, mountain ranges, hills, and countryside. The terrain is gentle and moderately undulating. Olive cultivation has almost no limiting factors [6]. The climate is “subtropical Mediterranean,” with very dry, hot summers and mild but slightly humid winters. The average annual rainfall is 556 mm [55]. The traditional land use in this area is agricultural. Rainfed cereal crops and olive groves are the main crops. Beginning in 1986, due to Spain’s integration into the EEC, CAP subsidies altered the olive groves in Estepa. Cultivation techniques that increased productivity with greater use of machinery began to be applied [56].

The Estepa PDO was officially recognized by the Spanish government in 2004 and by the EU in 2010. The Estepa PDO is a good example of a local agri-food system where producers implement strategies for differential quality and environmental sustainability. It is an example of a production method that increases the competitiveness of olive oil by increasing its price. Analyzing the shifts in olive oil production methods in Estepa that have led it to become a world reference requires a holistic, institutional, and historical analysis (Figure 1). Thus, the methodology combines three analytical and descriptive perspectives that present a comprehensive structural approach.

Figure 1. Methodological approaches. Holistic analysis considers all elements and their interrelationships when studying change processes. These include questions around productive structure, environmental sustainability, and quality. Institutional analysis promotes change through regulations and financial support, fostering a sustainable, high-quality model of primary and industrial production. Historical analysis exhibits changes in chronological order and explains the progressive efforts undertaken by producers in the region.

It is possible to increase the selling price of produce in monoculture territories that have historically been characterized by their low capacity to capture added value. This can be achieved by applying and combining strategies that are interconnected and linked to the rural and productive context. For this reason, a holistic analytical approach is adopted.

These strategies require the involvement of over 5000 agricultural producers. Therefore, the changes require long periods of time for gradual implementation; in this case study, this translates to decades in order to organize and raise awareness among farmers. For this reason, a historical analytical approach is used.

Furthermore, these strategies could not have been implemented using individual market competitiveness formulas, given the disadvantage faced by producers in this fragmented market. These strategies require institutional support and a favorable regulatory framework from regional, national, and EU public administrations. For this reason, an institutional analytical approach has been adopted.

The interrelated strategies that have enabled the progressive transformation of the production model and contributed to improved prices can be summarized as those that implement structuring, sustainability, and quality measures. The latter measures directly impact improved sales prices and could not have been implemented without the former two or the support of the public sector. For this reason, a combination of holistic, historical, and institutional analytical approaches was used.

Holistic analysis studies change processes by considering all elements and their interrelationships, rather than individual parts. In this sense, the comprehensive analysis that is proposed considers aspects related to production and positioning in the value chain. These include questions around productive structure (cooperativism and associations); environmental sustainability (organic production, integrated production, soil management, and use of cover crops, waste management); and quality (total quality; PDO quality certification). Through institutional analysis, regulations, and financial support, promote changes to foster a sustainable and high-quality primary and industrial production model (of olives and oil). Institutional analysis allows for the identification of explicit, synergistic, specific objectives with the desire to settle the population in the territory. The historical analysis exhibits the changes in chronological order. This explains the progressive efforts undertaken by producers in the region, genuinely pursuing price improvements that are compatible with social and environmentally sustainable development.

To address this triple methodological approach, the following have been consulted (Figure 2): academic bibliographic sources that specifically and piecemeal study specific aspects of the object of analysis and that serve as a starting point; Secondary statistical sources obtained from bibliographic analysis or from public institutions that collect and publish them, either punctually or periodically; The regulatory sources that govern, at the institutional level, the regulatory conditions and financial instruments that facilitate the changes analyzed.

Figure 2. Research techniques for obtaining relevant quantitative and qualitative information.

Primary sources, quantitative and qualitative, were employed. The former was acquired from registry data to verify and contrast the observed facts. The latter were obtained from in-depth interviews with managers, cooperative members, and producers. Stakeholders provided qualitative information to provide a holistic and structured understanding of the analyzed reality. The stakeholders interviewed were the following:

• Managing Director of the Oleoestepa Second-Level Cooperative (Estepa, Seville).
• Secretary of the Regulatory Council of the Estepa PDO.
• Integrated Production Agent for the Sor Ángela de la Cruz SCA Cooperative (Estepa, Seville).
• Integrated Production Agent for the Arbequisur SCA Cooperative (Aguadulce, Seville).

This has made it possible to structure, organize, and correlate the report on the actions carried out in the Estepa region and its PDO for virgin olive oil, and to analyze the achievement of the established institutional objectives, primarily related to environmental and social sustainability.

3. Results and Discussion

The PDO promoted the strategy of increasing added value through quality improvements. This consolidated the structuring and productive integration of the olive oil sector. This was done in accordance with the requirements of the third food regime. However, it is also true that most of the first-level agricultural cooperatives in the Estepa region were established under the second food regime, in the 1950s and 1960s. In those years, the cooperatives wanted to be able to produce their own olive oil. Conversely, their production and marketing model was based on high-volume production [23]. They lacked access to commercial channels and could only sell in bulk. These first-level cooperatives achieve significant productive efficiencies: they concentrate olive production from the closest crops and optimize investments in machinery and technology. This is how olive and oil production costs are lowered. In the Estepa region, 21 cooperatives (which bring together many olive producers to make oil) and two private olive oil mills (each owned by a single producer or company). Of these 21 cooperatives, 20 are part of the Estepa PDO, with 5154 producer members. All follow the PDO’s recommendations for producing oil of differential quality. Nineteen cooperatives form a second-level cooperative to market under a single brand. They group 60,000 hectares of olive groves to make more than 36 million kg of olive oil.

The second-level cooperative, Oleoestepa, which was established in 1986, is the one leading the major changes. Figure 3 shows the historiogram of its constitution. The second-level cooperative has managed to unite and bring together the first-level cooperatives. Oleoestepa, the marketing cooperative, manages the olive oil commercial activity, but also implements a radical change in the production and valorization model for olive oil in the region. New standards and criteria determine what to produce, how to produce it, and for whom to produce it. New standards and criteria aim to achieve greater decision-making power and local influence. The objective is to generate greater added value and ensure that these can achieve greater profits for producers. Unlike previous stages, the focus now shifts to marketing. Oleoestepa defines and plans commercial strategies that even impact how the olives are produced on the tree. Everyone develops and accepts the standards and criteria in a coordinated manner. The second-level cooperative, Oleostepa, exercises leadership. This is what Farré calls the “Corporate Quality Model,” which imposes a “vertical and private governance model, focused exclusively on the olive oil sector” [23] (p. 87). Concentrating supply was a slow process. This required the approval of all cooperatives. It also needed large investments in new industrial facilities. In 1995, Oleoestepa took over the entire olive oil market produced by Estepa’s first-level cooperatives: packaged and bulk oil. Since then, Oleoestepa has made significant efforts to promote its oil’s distinctive quality and the sustainability of its production. The Oleoestepa brand is now recognized by the main international and national operators in the olive oil market.

Figure 3. Historiogram of the constitution of the second-degree cooperative Oleoestepa SCA. 1. A total of 14 cooperatives form the second-level cooperative Oleoestepa SCA; 2. SCA Olivarera Pontanense is incorporated; 3. La Inmaculada Concepción SCA is incorporated; 4. Arbequisur SCA is incorporated; 5. Integrated Production certification is initiated; 6. the Estepa PDO is established; 7. the EU recognizes Estepa PDO; 8. organic production certification is commenced; 9. San Juan Bautista SCA from Villanueva de San Juan is incorporated, totaling 17 cooperatives; 10. Oleoestepa organic oil has been launched on the market.

This backbone model for producing olive oil in the region has another milestone of particular importance. This achievement is grounded on requiring the integrated production (IP) model in olive groves. This was implemented gradually. However, the leadership of Oleoestepa was essential for its implementation. The marketing cooperative managed to impose and enforce this requirement. This led to a greater appreciation of olive oil in the markets. Some first-level cooperatives in Oleoestepa already met this requirement (Alberquisur SCA); however, they gradually expanded their example. It is now a mandatory requirement for all cooperatives within the PDO. First-level cooperatives perform technical work to advise and monitor compliance with the IP regulations outlined in Spanish law: Decree 215 of 19 September 1995. There are what are known as Integrated Production Groups (IPGs). These IPGs are professionals who modernize and professionalize agricultural production methods, and they also guarantee traceability. Therefore, the region has a network of 25 technicians. Each technician is responsible for a maximum area of 2500 hectares of olive groves. They inspect farmers’ farms; they analyze the soil and olive leaves to determine nutrient status and disease levels. They also perform pre-harvest analyses of multiple residues on the olives (a few days before the harvest begins). They also recommend fertilization and pest treatment plans to ensure compliance with the standard for IP. IPGs technicians act as expert local agents because they understand the characteristics of all the olive grove systems in the region. Additionally, they are promoters and direct witnesses of the changes implemented in agronomic practices to achieve greater environmental sustainability and higher production quality. On the one hand, they manage to unify criteria among producers, considering the differences that characterize each olive grove (soil, slope). Additionally, they generate ongoing feedback processes regarding the PDO. They also contribute to their technical studies and experiences. They are heard through bottom-up processes regarding decisions regarding production quality, which everyone demands from each other.

In 2003, the EU again modified the system to protect the agricultural sector. The core of the reform was to decouple production aid and implement Single Payment (SPP) per farm, subject to compliance with environmental protection requirements [57]. Since then, CAP has required farmers to implement ecological practices to receive aid. After decades of implementing measures to achieve the CAP’s initial objectives, it has emerged that these measures have had environmental impacts (soil erosion, water pollution, overexploitation, loss of biodiversity). The CAP’s new requirements now aim to make agricultural policy more consistent with the EU’s environmental objectives [58,59].

From a commercial perspective, the new requirements must be viewed as an opportunity, not a cost. This is achieved by applying strict control measures and rewards to optimize yield and quality. These control measures incentivize the production of top-quality EVOO, with zero traces of chemicals. Demanding the implementation and expansion of IP has been a cornerstone. It has served as a backbone and standardizer of production and control methods and a guarantor of environmental sustainability. The IP model has allowed for the rational management of agricultural activities. It has allowed for the application of good farming practices to conserve and protect the environment; it has also fostered the economic viability of farm operations by reducing production costs [60]. This has been achieved with IPGs technicians’ ongoing supervision, control, and advice. In addition, an inspection and certification body authorized by the National Accreditation Entity (ENAC) verifies compliance with the regulations through an audit system. It then grants a guaranteed label to the product. In 2002, Oleostepa began certifying IP. Although the EU does not recognize IP as organic production [61], the self-imposed requirement from the second-level cooperative that all marketed production be subject to IP achieved its full implementation in the region. This requirement established the pillars of environmental sustainability and quality differentiation for its EVOO. But what factors encourage farmers to adopt the IP system? On the one hand, there is the information provided by other farmers and agricultural associations; the example of those who have already begun producing in this way; and on the other hand, the professional technical advice of external agents (technological centers, public research organizations) [62]. Initially, the regional government funded technical advice for expanding IP [18]. However, when public aid for implementing IP ended, the cooperatives continued to pay for the requirement and monitoring of this production method among their members. This demonstrates a firm belief in the environmental sustainability and quality of olive oil production in the Estepa region. Furthermore, the marketing cooperative, Oleostepa, requires the implementation of IP in its bylaws to market under its brand.

The IP of olive groves in the Estepa PDO has become a national and international benchmark. Olive groves are the most important crop in Spain’s IP. In Spain, 18% of the olive grove area is under IP [17]. In the region of Andalusia, this proportion is 24.36% of olive groves [3]. The demands of environmental sustainability, as a strategy implemented in the Estepa region, achieve the highest proportion of IP olive groves within its geographical area (Figure 4). It is Andalusia’s largest olive oil PDO, with 80.6% IP.

Figure 4. Percentage of hectares of IP concerning the total olive groves with PDO EVOO in Andalusia. 2021. Source: Prepared by the authors using Spatial Reference Data for Andalusia (DERA) Junta de Andalucia-2024 [63].

This strategy, which implements IP as a commercial requirement for the brand, is an essential pillar of differentiation associated with the PDO territory. The prestige of the territory is closely linked to the prestige of the product obtained from it. This is the basis of the development model for endogenous potential with dynamic competitiveness. This reputation is promoted and defended by the commercial leadership of the second-level cooperative, which further strengthens the first-level cooperatives to “protect” territory and product, combining environmental sustainability and quality.

Table 1 displays the total hectares of olive groves, IP, and organic olive groves by municipality in the Andalusian EVOO Estepa PDO in 2023. If organic olive groves are added to the IP area, this covers almost 86% of the olive groves cultivated in the Estepa PDO municipalities. The commercial requirement shows the path to 100% achievement between integrated and organic production. The few olive grower partners who are not yet part of the model are in transition; they come from traditional cultivation and are now joining as cooperative members. Of the total 56,409.64 hectares of olive groves in these municipalities, 52,000 are in the PDO. Therefore, it is affirmed that 93.2% of the hectares cultivated in the PDO meet the sustainability and quality requirements. 6.8% of producers are still in transition. Organic production has its market segment. It is still in its infancy, but the second-tier cooperative is adding it to its product line to address market segmentation and achieve added value.

Table 1. Total hectares of olive groves, IP, and organic olive groves by municipality in the Andalusian EVOO Estepa PDO in 2023.

Municipality	Total Olive Grove Area (a)	IP Olive Grove Area (b)	SIPEA 2022 Ecological Surface (c)	(b)/(a) %	(b + c)/(a) %
Aguadulce (Sevilla)	1017.15	773.92	0.00	76.09	76.09
Badolatosa	3333.88	2842.03	258.02	85.25	92.99
Casariche	4505.82	4011.07	491.37	89.02	99.92
Estepa	14,100.83	12,332.52	611.22	87.46	91.79
Gilena	3382.11	2488.79	264.11	73.59	81.40
Herrera	3362.58	2777.67	208.45	82.61	88.80
Lora de Estepa	1153.06	935.42	186.49	81.13	97.30
Marinaleda	1616.72	1361.64	90.33	84.22	89.81
Pedrera	4522.39	3924.06	431.29	86.77	96.31
La Roda de Andalucía	6039.87	5192.93	247.94	85.98	90.08
El Rubio	1209.49	1038.27	6.24	85.84	86.36
Puente Genil (Córdoba)	12,165.74	7655.27	345.64	62.92	65.77
Total	56,409.64	45,333.58	3141.10	80.36	85.93%

Source: Prepared by the authors based on data provided by Junta de Andalucía.

The commercial cooperative has developed a comprehensive understanding of the multiple dimensions of the concept of quality: its nutritional attributes (its organoleptic, nutritional, and hygienic-sanitary components); its psychosocial characteristics (intangible elements incorporated into the product with cultural and identity expressions, tradition, health, and environmental protection); and its usage and disposal characteristics with certified formats, well-designed packaging, and sufficient storage capacity. All these dimensions are closely linked, interrelated, and continuously monitored, inspected, and controlled from the production of the olives on the tree (each farmer has a farm logbook, where all production milestones, treatments, dosages, pruning, and so on are recorded in detail) to the final packaging of the oil (laboratory analysis, inspections, and certifications).

Quality is hence understood as a factor of competitive differentiation. Figure 5 presents the historiogram of the quality management-production strategies for Estepa Region Oil. Quality pursues a greater market share and a better position in the value chain. Quality pursues a better price for a better return on olive oil, a better return for its producers. Nevertheless, at the same time, quality becomes a demanding way of understanding and caring for production and the product. In quality, environmental sustainability, territorial identity, health, status, and prestige guarantee brand differentiation. Quality generates a collective sense of pride among the olive and oil producers in the region [23]. This explains the demand for IP, which IPGs technicians continuously advise and supervise. This also explains why all the olive oil produced by first-level cooperatives and marketed by the second-level cooperative is EVOO. Compliance with integrated and/or organic production standards guarantees the oil’s unique attributes. Quality, therefore, begins with applying a differential production system on farms.

Figure 5. Historiogram of the quality management-production strategies for Estepa Region Oil. 1. Laboratory and tasting panel; 2. start of IP certification; 3. start of ISO 14001 Environmental Management certification [64]; 4. establishment of the Estepa PDO; 5. start of ENAC laboratory certification for olive and oil analysis [65]; 6. start of IFS [66] and BRC [67] Food Industry Certification; 7. recognition of the PDO in the EU; 8. start of Organic Production Certification [68]; 9. kosher product certification [69]; 10. non-GMO product certification [70]; 11. adherence to the Food Industry Comprehensive Sustainability Decalogue [71]; 12. obtaining the IQNet SR10 certificate on Corporate Social Responsibility management [72]; 13. JASS organic production certification [73]; 14. renewal of the BRC certificate (highest level); 15. accreditation of the laboratory for the comprehensive analysis of olive oil and olives [74]; 16. ECO_Garden Organic Production Certification (Taiwan) [75].

Nonetheless, at the same time, in the industrial transformation phase, they have a laboratory to analyze and control each oil tank that the first-level cooperatives deliver to the second-level marketing company. First-level cooperatives have the analytical and tasting results of all the oil tanks in their cooperative and those of other cooperatives on an intranet, with maximum transparency. This allows for “good competition” among cooperatives seeking the highest quality laboratory results. This will enable cooperatives to compete to achieve the highest oil quality. This allows for the overall production of excellent quality EVOO. But the commercial cooperative also rewards, pays out, through a better price, EVOO that has laboratory analysis with results of 0.00 parts per million in traces of active ingredients in pesticides (fungicide, herbicide, insecticide…), the same as organic production and well below the Maximum Residue Limits (MRLs) of pesticides in and on food and feed of plant and animal origin set in Regulation (EC) No 396/2005 [76] of the European Parliament and of the Council of 23 February 2005.

The control strategy extends to international markets. Any new or increased hygiene and sanitation requirements imposed in global markets are added to the laboratory’s analysis and detection protocols. Research is also conducted to address the causes of even the slightest trace.

Accordingly, the quality certified by the PDO serves a dual purpose: (1) on the one hand, quality allows the product to adapt to the new consumption models of post-industrial societies, where consumers seek healthy products [41]; (2) and also, quality allows the product to improve its market position, increasing its market share and sales prices, and achieving greater profitability. All of this occurs in markets, such as the food industry, which are increasingly demanding, with high challenges that create entry barriers for potential competitors.

The selling price is important, as it affects revenue and influences the product’s position in the market. The image associated with quality is protected through commercial strategies that aim to avoid trivializing the product. Marketing and positioning strategies seek to simultaneously preserve the image and price of EVOO. In this sense, between 75% and 80% of EVOO sales maintain their high cost, and only 20% and 25% are sold under promotion.

Defending the price, for the quality and positioning of this quality in the markets, allows the cooperative members to settle prices that are above the average (Figure 6) at which the Olive Oil Origin Price Information System in Spain (POOLLred) prices are set. (Quotes of the purchase and sale operations of bulk oil were extracted from the POOLLred. Calculations, in more €200/t, were obtained from the moving average weighted by the negotiated volume of the updated prices in the purchases and sales of bulk oil of Spanish origin and registered for the categories EVOO, Virgin Oil, and Lamp Olive Oil. Data from the Foundation for the Promotion and Development of Olive Groves and Olive Oil were also used.)

Figure 6. Evolution of net settlement prices of olive oil and EVOO settled by the POOLLred (Olive Oil Origin Price Information System in Spain) and the Oleostepa. Source: Prepared by the authors based on data provided by Oleoestepa. (Prices exclude VAT).

Given that it is a local strategy that transforms a commodity into a quality-differentiated product, the increase in the price of the product under analysis cannot be said to have an inflationary impact. Market segmentation identifies high-income consumers who are willing to pay more for a differentiated product. However, this does not mean that competitive, low-priced products will no longer exist. Therefore, the political implications are linked to the search for strategies that enable farmers to generate greater profits through differentiation. A potential impact on inflation should not be a cause of political concern, since there will not be a generalized increase in commodity prices worldwide.

The ENAC certification of the laboratory and its accreditation to perform comprehensive analysis attest to the rigor of the analysis and control strategy. This establishes internal confidence among the member cooperatives and external confidence among major customers. It should be noted that each tank of oil that the first-tier cooperatives deliver for packaging and marketing is compensated at prices set on a classification scale according to the quality results obtained in the laboratory. The laboratory must consequently meet the highest standards of objectivity, rigor, and transparency, ensuring its results cannot be questioned.

The marketing cooperative holds the highest IFS and BRC Food Industry Certification level. This signifies that audits and inspections for these certifications are not announced. This is a guarantee for both domestic and international packaged goods retailers. It is also a guarantee for large retail companies, especially for products sold under private labels.

Other certifications facilitate entry into other international markets where the marketing cooperative and its brand are already present: Kosher product certification, or ECO_Garden Organic Production Certification (Taiwan). This responds, once again, to the strategy of targeting the product and brand to the markets, meeting, in each case, the food or usage requirements. This reflects the desire to orient the product and brand toward intangible psychosocial or cultural factors. These certifications aim to introduce the product to more demanding markets willing to pay higher prices associated with higher quality. This allows the commercial cooperative to export between 35% and 50% of its production, depending on the year and harvest.

The strategic importance of the IQNet SR10 certification for Corporate Social Responsibility management, with a social, economic, and environmental commitment, is also highlighted. Strategies are being implemented to use 100% recycled PET containers; recycled cardboard packaging; consume almost 50% of photovoltaic energy; and progressively implement circular economy pilot projects to compost waste.

Finally, this study can deduce that the PDO certifications for this EVOO are associated with a comprehensive quality and sustainability policy in response to an environmentally conscious production and consumption model. This demonstrates that these strategies respond to a broad, diverse, integrated, and demanding concept of quality and sustainability. This idea goes beyond the simple quality of good taste and hygienic and sanitary safety. The cooperatives in the Estepa region employ a broad and dynamic competitive quality and sustainability strategy that incorporates multiple and varied efficient measures for improvement and appropriation of added value, and that achieves higher prices.

Comparing oil production among cooperatives in Estepa with those in Spain (with PDOs), it is observed that in the 2020–2021 harvest, EVOO, the highest quality olive oil, represents 85% of the production in Estepa cooperatives (Table 2). Only 44% of this higher-quality olive oil is produced in cooperatives with PDOs in Spain. In contrast, Lamp olive oil (a lower-quality olive oil) only accounts for 5% of the production in Estepa cooperatives. Spanish production of this lower-quality olive oil is 20%. Among the highest quality olive oils, those marketed with the Estepa PDO certification mark represent 11.9% of total production. In Spain, olive oil production under the PDO represents 8.2% of total olive oil production. This shows another indicator that confirms the quality management of oil in Estepa. Management that yields results in the production of quality olive oils and in improved prices, which are well above the Spanish average.

Table 2. Quality of olive oil production in the 2020–2021 harvest.

	Categories (%)			Total	PDO Certified Oil/Total Oil (%)
	Extra Virgen	Virgen	Lampante
Producers integrated into the Estepa PDO (*)	85.0	10.0	5.0	100.0	11.9
Total Spain	44.0	36.0	20.0	100.0	8.2

Source: Yearbook of Agricultural Statistics. Ministerio de Agricultura, Pesca y Alimentación (2022) [3] (*) Prepared by the authors based on data provided by the Regulatory Council of the Estepa PDO.

However, it is worth examining whether these different strategies for improving competitiveness have been able to reverse the hypothesis proposed by Ginel in the Estepa region. He argues that the population is neither maintained nor rejuvenated in rural areas and agricultural activity [50]. This is closely linked to the studies by García and Sanz, in which they state, “The great advances in quality experienced by Spanish olive oil in recent decades have not resulted in a significant improvement in differentiation rents” [18] (p. 120).

In Spain, the latest Agricultural Census from the National Institute of Statistics [7] shows a high proportion of older people among the owners of used agricultural land (UAA, Utilized Agricultural Area). Currently, 41.3% of these farm owners are over 65 years old; this figure is 67.2% if those over 55 are included. In other words, more than two-thirds of the owners of UAA in Spain are over 55 years old. The 2009 Agricultural Census placed this percentage at 59.3%, 8 percentage points lower than the current rate. This confirms that, in Spain, for every 10 farm owners over retirement age, there is only 1 young person, defined as under 34 years old. Generational turnover in agricultural activity appears to be at high risk.

In Andalusia, 63.8% of farm owners are over 55 years old; in 2009, the figure was only 52.4%. In Andalusia, the generational turnover is more severe; for every 10 farm owners over retirement age, 0.7 are under 34. In the Estepa region and its surrounding area (Table 3), where most are dryland olive groves, 67.7% are now over 55 years old; 39.7% are over 65 [7]. In this region, the replacement rate is the same as the Spanish average: of every 10 owners over retirement age, only one is under 34.

Table 3. Average age of the farm managers of Used Agricultural Surfaces in the municipalities of the Local Food System of Estepa olive oil.

Municipality	Average Age (Years)
Puente Genil (Córdoba)	60.58
El Rubio	62.69
Villanueva de San Juan	62.27
Aguadulce	63.23
Badolatosa	62.99
Estepa	60.18
Gilena	61.51
Herrera	62.09
Lora de Estepa	61.55
Marinaleda	63.36
Pedrera	61.39
Roda de Andalucía, La	58.97
Casariche	63.29
Andalucía	60.45
Spain	61.41

Source: Prepared by the authors using data from the Agrarian Census 2020. Instituto Nacional de Estadística (INE) [7].

The data verifies the high age of the agricultural population. It proves that there are few young people in the Spanish countryside. The average age of farm owners in Spain is 61 (Table 3). Many producing municipalities, which belong to the Estepa Local Food System for olive oil, are older than this average age. In these regions, 90.5% of the farms are olive groves, covering 91% of the area in hectares of the region’s UAA [7].

To understand the reasons for this situation, analyzing how ownership of olive groves is distributed in the Estepa region is necessary. It can be argued that the problem of generational renewal in agriculture affects the evolution of the structure of agricultural holdings. At the same time, the lack of generational renewal is also a consequence of this way of distributing and concentrating olive groves.

More than half of the olive groves in this region (53.5%), the core of the Estepa Local Food System for olive oil, are less than five hectares in size, accounting for 10% of the total olive grove area (Table 4). In contrast, 4.7% of the farms are larger than 50 ha, and 1.3% are larger than 100 ha, accounting for 37.5% of the agricultural area under olive groves in this region. Among the cooperative members of this Local Food System’s PDO, the figures are repeated: 53.9% have olive groves of less than 5 ha (Estepa PDO 2023).

Table 4. Number of farms and olive grove area in the Agri-Food System of the Estepa EVOO PDO according to their size.

	2001–2002				2021–2022
Dimension Hectares	Number of Farms	%	Surface	%	Number of Farms	%	Surface	%
x ≤ 5	2890	62.2	6046	12.4	2357	53.5	5507	10.0
5 < x ≤ 10	724	15.6	5111	10.5	766	17.4	5381	9.8
10 < x ≤ 20	470	10.1	6638	13.6	592	13.4	8472	15.4
20 < x ≤ 30	176	3.8	4264	8.7	240	5.5	5841	10.6
30 < x ≤ 50	188	4.0	7297	14.9	240	5.5	9256	16.8
50 < x ≤ 100	143	3.1	10,026	20.5	152	3.5	10,383	18.8
x > 100	52	1.1	9494	19.4	56	1.3	10,282	18.7
Total	4643	100.0	48,876	100.0	4403	100.0	55,122	100.0

Source: Prepared by the authors based on data provided by the Andalusian Regional Government.

Across Spain, over 70,000 agricultural properties have disappeared since 2009. This reduction has not affected all farms equally. Farms with less than 5 hectares have decreased by more than 52,000, and those with more than 100 hectares have increased by 4500 [7]. The evolution of the number of olive groves shows a similar trend. In the territorial area under study, around the Estepa PDO, this same trend is observed (Table 5). The total number of farms in the 2021–2022 campaign has decreased by 5.2% compared to 10 years earlier. However, the total area under olive groves has increased by 6246 hectares, 12.8%.

Table 5. Variation in the number of farms and olive grove area in the Agri-Food System of the Estepa EVOO PDO according to their size in the period 2021–2022.

Dimension Hectares	Variation in the Number of Farms	Rate (%) of Variation Number of Farms	Variation in Hectares	Rate (%) of Variation in Hectares
x ≤ 5	−533	−18.4	−539	−8.9
5 < x ≤ 10	42	5.8	270	5.3
10 < x ≤ 20	122	26.0	1834	27.6
20 < x ≤ 30	64	36.4	1577	37.0
30 < x ≤ 50	52	27.7	1959	26.8
50 < x ≤ 100	9	6.3	357	3.6
x > 100	4	7.7	788	8.3
Total	−240	−5.2	6246	12.8

Source: Prepared by the authors based on data provided by the Andalusian Regional Government.

However, the most notable is how those that are gradually disappearing are the small farms of less than 5 hectares. Even in number, these small farms remain the majority. However, in 10 years, there has been an 18.4% decrease in small farms in this region; regarding surface area, this implies a reduction in their hectares of 8.9%. Medium-sized and large farms are the ones that are increasing. Thus, there is a progressive, although still slow, concentration of land cultivated with olive groves. This is due to the abandonment of unprofitable farms due to their small size. Better prices are not reversing the profitability problems of small farms.

Therefore, two different realities are associated with the structure of land ownership. These realities are closely related to the total returns obtained from production. There is a very evident duality in the distribution of land area, and this must be considered to understand the reality of this Local Food System, its cooperatives, and its members.

Indeed, IP methods and the strict requirements and technical controls applied to obtain top-quality EVOO have allowed for cost rationalization and savings. They have also allowed, with higher sales prices, to improve yields [18]. Being a benchmark of quality associated with the product (EVOO) and the territory (Estepa region) has allowed for obtaining a better price in the sale of the oil. The olive price provides for a better return on the raw material. However, even with all this, the margin per kilogram of olives remains very tight; Even more so in sloping olive groves [18]; but also in traditional, rainfed olive groves, with around 110 trees per hectare, with thick trunks (making harvesting more difficult), and, above all, the margin remains tight in olive groves on small farms, those of less than 5 and 2 hectares (Table 6). Average yields on these lands are around 4000 kg/ha [18]. These yields, on farms of less than 5 hectares, are difficult to sustain as a primary activity for a farmer and their family.

Table 6. Olive grove typology in the Estepa PDO area. 2021/2022 season.

Olive Grove Typology	Incline (%)	Density (Olive Trees/ha)	Farms (%)	Surface/ha (%)	Medium Size (ha)
In dry land	≥20	≤210	4.8	950.8 (1.8%)	2.1
In dry land	≥20	>210 and <800	1.2	117.29 (0.2%)	1.0
In Irrigation	≥20	≤210	0.7	152.59 (0.3%)	2.3
In Irrigation	≥20	>210 and <800	0.4	75.02 (0.1%)	2.2
In dry land	<20	≤210	48.2	31,241.31 (56.7%)	6.8
In Irrigation	<20	≤210	14.1	8025.5 (14.6%)	6.0
In intensive dry land	<20	>210 and <800	21.4	9069.0 (16.5%)	4.5
In intensive irrigation	<20	>210 and <800	8.6	4859.11 (8.8%)	6.0
Superintensive	<20	≥800	0.6	638.05 (1.2%)	11.0
Total			100	55,129.02 (100%)

Source: Prepared by the authors based on data provided by the Andalusian Regional Government.

Even though prices have been improved through comprehensive strategies to be competitive in terms of quality, these have not been able to reverse the precarious situation of small farms. This leads to the continued abandonment of agricultural activity and the lack of generational change.

4. Conclusions

Efforts to differentiate through quality demonstrate the widespread changes in the way olives and olive oil are produced more sustainably; they indicate the changes in industrial processes that result from exhaustive and rigorous controls and inspections; and they demonstrate greater achievements in improving prices. All this translates into a greater amount of money received by olive producers. This paradigm is achieved through proven social and technical–professional integration.

There is a social backbone with producer association formulas in first- and second-level cooperatives. There is also a professional and technical backbone characterized by strong, coordinated technical input and developed through the APIS, management structures, strict and transparent technical protocols and laboratory certifications for quality control, and very present and active leadership in the second-level cooperative and in the governing and management bodies of the PDO.

All of this has led to a Local Food System centered around EVOO in the Estepa region. This Local Food System is endogenous and creates an image of quality and environmental sustainability around a product associated with a territory and with characteristic production methods (cultivation) and processing. This Local Food System is a product that commands prices above the average of its competitors and achieves a more balanced position in the value chain. From the analysis presented in this article, it can be deduced that the Local Food System for olive oil in the Estepa region responds to the paradigm of dynamic competitiveness (innovation-quality) instead of static competitiveness (cost reduction). However, despite all of this, it is not evident that this competitiveness model, which has improved prices and income at the source of production and processing, is achieving the necessary generational change in the primary activity related to olive oil in the Estepa region.

The reasons for the difficulties in reversing the structural problem of a lack of generational change in agriculture could be numerous. Some hypotheses have been suggested, but it must be acknowledged that economic and social reality is complex and multifactorial, which highlights the necessity of recognizing the limitations of these studies. Future research will require other case studies for comparison and contrast with this one. These studies should focus on achieved successes in product revaluation, retaining the population in agricultural activity, and generational change. It will be necessary to identify the factors that determine such successes. This is an area of research of particular interest, given that the CAP has been trying to prevent rural exodus for decades, with limited success.